MUSCAT(Reuters) - Recent overtures from the United States towards Iran were a step in the right direction, but more initatives were needed to improve relations between the two countries, Oman's foreign minister said.
Youssef Bin Alawi Bin Abdullah made his comments to reporters following talks in Muscat on Saturday night between U.S. President Bill Clinton and Oman's Sultan Qaboos.

Bin Alawi said Clinton showed interest in political developments in Iran during his talks with Sultan Qaboos.
"The offer by the U.S. Secretary of State (Madeleine Albright) lifting some sanctions on Iranian exports is a step forward, but relations between the two countries need more initiatives," Bin Alawi said, but did not elaborate.

Albright called earlier this month for all-out efforts by the United States and Iran to put two decades of animosity behind them and indicated U.S. regret at its support for Iraq in the 1980-88 Iran-Iraq war.
In a practical gesture, she announced an easing of sanctions on key non-oil goods from Iran and pledged to accelerate efforts to resolve outstanding financial claims between the two states.
In the first high-level Iranian reaction, Iran's Supreme leader Ayatollah Ali Khamenei rejected the U.S. overture on Saturday, saying "confessions" of wrongdoing against Iran were not enough.

Iran's Foreign Ministry, which initially welcomed the easing of U.S. sanctions and said Tehran would respond by importing U.S. grain and medicine, said on Tuesday Washington was insincere in dealing with the Islamic republic.
Iran's moderate President Mohammad Khatami has not yet made any public comments on the U.S. initiative, which was announced soon after the victory of reformists in Iran's parliamentary elections in February.

TEHRAN -XINHUA - Iran's supreme leader Ayatollah Ali Khamenei on Saturday turned down the recent U.S. overture for better ties, amid mixed reactions from senior Iranian officials.
The issue of talks with Iran put forward by U.S. is "deceitful" with an aim to set stage for more enmities and to regain its former interests in Iran, Khamenei said in the northwestern holy city of Mashhad, Khorasan province.

Speaking to a gathering on the occasion of "Eid Ghadir" to mark the appointment of the first Shiite Imam Ali, he said that the recent U.S. confession of mistakes in its ties with Iran was " deceitful and belated confessions without apology" and "useless" for the Iranian nation.
The Iran-U.S. relations are far from the mere issue of trust or lack of confidence between the two countries, he was quoted by the Islamic Republic News Agency as saying.

"Iranian nation and officials consider the U.S. as their enemy because Iran's history is fraught with animosities and treacheries by the U.S., to some of which U.S. has admitted and would admit to the rest in future," said Khamenei, who has the final saying on important issues of the country.

In her speech to the American-Iranian Council in Washington on March 17, the U.S. Secretary of State Madeleine Albright announced the lift of a ban on U.S. imports of Iranian luxury goods and invited Tehran to pull down the "Wall of Distrust" between the two countries for a "new relationship."

Albright admitted that the U.S. had been involved in the 1953 coup, supported the former Shah regime and helped Iraq in the 1980- 88 Iran-Iraq war.
Iranian officials showed a mixed reaction to Albright's overture, which was described as "positive" by some Iranian officials, but "another step of U.S. conspiracy" by others.
Secretary of the powerful arbitrate and advisory State Expediency Council Mohsen Rezaei said last week that Washington's explicit acknowledgment of past mistakes in its policy toward Tehran and its decision to ease sanctions against Iran signaled a new era in the U.S. attitude to Iran.

Rezaei, former commander of the elite Islamic Revolutionary Guards Corps, said that the U.S. new strategy could lead to a resumption of ties between the two countries and the new Iranian year which started on March 20 would be important for the Tehran- Washington ties.
Washington severed ties with Tehran in 1980 after its embassy in Tehran was taken over by radical Iranian students at the heydays of the 1979 Islamic revolution, which toppled the former pro-U.S. shah regime.
Following the election of moderate President Mohammad Khatami in 1997, the two countries exchanged some goodwill signals and U.S. officials called for "unconditional talks" with Tehran to improve their ties.

In reply, Iranian government officials have urged the U.S. to take concrete steps to show its sincerity in improving ties with Iran.

An AP News Analysis
By Leon Barkho
Associated Press Writer
BAGHDAD, Iraq -Iraq views warming ties between Iran and the United States with fear and suspicion  perhaps enough of both to make it consider improving its own relations with its regional rival and with the world's remaining superpower.

Iraq and Iran long have competed for dominance in the Persian Gulf region. Most Arabs, particularly the gulf states, rallied behind Iraq in its 1980-88 war with Iran. Even the United States came to Baghdad's aid against what it saw as a dangerous Islamic state, providing logistical support and billions of dollars in credits.

But Iraq's 1990 invasion of Kuwait changed all that, leading to icy relations with Persian Gulf states. Iran's ties with Saudi Arabia and Kuwait, which contributed billions of dollars to Iraq's war effort with Iran, have improved dramatically in recent years.

The United States, viewed by Iran as the great Satan, made overtures last week to what it sees as a new reform-minded leadership in Iran.

In what Baghdad considered yet another step to further isolate Iraq, Secretary of State Madeleine Albright last week lifted a ban on U.S. imports of Iranian carpets and other luxury goods. She said both the United States and Iran had fought conflicts begun by Iraq's "lawless regime" and should work together to reduce tension in the region.

The United States openly advocates a change of government in Baghdad.

Although the Iraqi government has not officially commented on the U.S. move to lift some sanctions on Iran, the official Iraqi press has expressed misgivings.

Iraq's most influential newspaper, Babel, published by President Saddam Hussein's eldest son, Odai, said the United States move was tantamount to "encouraging Iran to expand its aggression on Iraq."

While Babel warned Iran not "to play with the (new) fire," it stopped short of saying what Iraq, crippled by U.N. trade sanctions, would do if Tehran joins forces with Washington against it.

To escape isolation, Iraq may make its own overture to Iran, with whom ties are almost as cool as when a 1988 U.N.-brokered cease-fire ended hostilities.

Baghdad-based diplomats said Iraq has even asked an Iranian dissident group it had earlier welcomed to move its offices outside the capital. The group, the Mujahedeen Khalq, denied the report.

Baghdad could see Gulf War trade sanctions lifted and its status on the international arena boosted if it accepts a new U.S.-backed, U.N. initiative for resumption of stalled weapons inspections.

The sanctions can be lifted once U.N. arms monitors are satisfied Iraq has given up all its weapons of mass destruction and the long-range missiles to deliver them.

In terms of business, government officials say Iraq may be as profitable a market for the United States as Iran once sanctions are lifted. Iraq holds the world's second-largest proven reserves of oil, after those of Saudi Arabia.

Iraq is wary it will lose most of its geopolitical status if Iran succeeds in persuading other Persian Gulf states and the international community that it has turned into a responsible regional superpower.

Baghdad still perceives itself as the only force capable of standing up to Iran if tensions flare between Tehran and the oil-rich Arab states on the Persian Gulf.

TEHRAN - XINHUA - Iran on Tuesday accused the United States of lacking honesty in assessing bilateral ties, and of raising "baseless" allegations against the Islamic republic.
"The recent contradictory remarks by U.S. officials in an inappropriate tone show not only their ignorance of the geography of the region, but also their lack of honesty in their relations with the Islamic Republic, " said Foreign Ministry spokesman Hamid Reza Asefi.

In a reaction to the recent remarks by the U.S. special envoy on arms disarmament, Asefi said Iran has never posed any threat to the region and its neighbors, the Islamic Republic News Agency reported.

Iran has a "bright record" in taking measures to help establish peace and stability in the region, he added.

The U.S. special envoy termed Iran as a threat to the region after Secretary of State Madeleine Albright Friday announced the lifting of a ban on imports of Iranian luxury goods and called for warm relations with Tehran.

Iranian officials showed a mixed reaction to Albright's overture, which was described as "positive" by some Iranian officials, but "another step of U.S. conspiracy" by others.
Washington severed ties with Tehran in 1980 after its embassy in Tehran was taken over by radical Iranian students at the heydays of the 1979 Islamic revolution, which toppled the former pro-U.S. shah regime.
Following the election of moderate President Mohammad Khatami in 1997, the two countries exchanged some goodwill signals and U.S. officials called for "unconditional talks" with Tehran to improve their ties.

By Tom Rachman
Associated Press Writer
NEW YORK -Hundreds of exquisite Oriental rugs line the walls of Sol Kalati's dim Manhattan warehouse. Rolled and upright, the thick trunks of these masterpieces  likely the only art made to be trod on  burst with ivory arabesques and crimson medallions.

Kalati peers through the thick of his rug forest and shrugs. The United States is allowing Persian rugs to be imported for the first time in 13 years but, he asks, what does it matter now?

"Generations have changed," says Kalati, in his Antique Rug Mall warehouse. "There were people who bought these things as an investment. That generation is dead. For the new generation, they don't know Persian rugs, they haven't seen Persian rugs."

U.S. Secretary of State Madeleine Albright announced the end of the import ban on Persian carpets, caviar and pistachios on Friday. But carpet dealers in the United States say Iran will have to fight to regain its place in the U.S. market because Indian, Pakistani and Chinese factories filled the gap during the ban, even adopting traditional Iranian motifs and colors.

Before the Islamic revolution in 1979, Iran had about 80 percent of the U.S. market in Oriental rugs, said Ron O'Callaghan, a dealer in New Hampton, N.H., and publisher of the online magazine www.rugreview.com.

"When they dropped out, the other makers said: What do you want? What size? What color?" said O'Callaghan. "I don't see the Iranians ever recapturing the market share that they enjoyed as recently as 25, 30 years ago."

The rug trade in the United States  conducted in darkened showrooms in midtown Manhattan, in top-flight department stores and increasingly on the Internet  is a $1.25 billion business, O'Callaghan said.

Shahriar Afshar, president of the San Diego-based Iranian Trade Association, which lobbied for lifting the sanctions, pointed out that Persian rugs are Iran's biggest export after oil.

Iran still gets 85 percent of its foreign exchange earnings from oil so the U.S. move is largely symbolic  but it's a gesture that will resonate among Iranians who value their nation's artistic tradition.

"Iranians are very proud of their carpets," Afshar said. "It's kind of like  if the U.S. can imagine  exporting the Mustang or apple pie. It's the very best that Iran has to offer.'

The attraction of Oriental carpets for the West goes back to the days when Marco Polo judged that Asia Minor produced "the best and handsomest carpets in the World."

The precise origins of Oriental rugs are debated, but it's certain that tribes in Central Asia have been producing them for centuries, generating and passing on techniques for the lush carpets, which started out to warm the floors of tents. Over time, tribes developed stylized motifs, preferred dyes, knot-types  all of which the keen collector can use to pinpoint origin.

The carpet trade with the West took off in the 16th century when Iran's shahs elevated tribal rug-weaving to an art and an industry. European kings and courtiers soon began demanding carpets from Persia.

Even during the ban, Iran's trade in rugs with the West has by no means ended. The country exported millions of dollars worth each year to Europe, and antique Persians still are regarded as among the finest rugs.

But it's telling that the term "Persian carpet" to mean all Oriental rugs has largely disappeared in the United States. "Oriental rug" has become the generic phrase  partly for accuracy but also because "Persian" no longer describes the product.

Soon after the embargo, carpet makers from India, China and Pakistan reacted to demand: If you want Persian carpets, that's what we'll make, they said. And traditional motifs and colors, which long served like a fingerprint, became jumbled.

Sadly, today's Oriental rug market has obliterated many neat distinctions between one village's style and that of the next. In the globalized economy, a deficit of Persian rugs in the United States has meant that "Persia" became Pakistan or China or India.

However, it's the recognition of the carpet as an integral part of Iran's culture that makes lifting the U.S. import ban important, said Hooshang Amirahmadi, who heads the American-Iranian Council that arranged the conference where Albright made her announcement.

"More than caviar or pistachios," he said, "the carpet is part of Iran's identity."